8 Best Oil Refinery Stocks To Invest In

02. Valero Energy Corporation (NYSE:VLO)

Number of Hedge Fund Holders: 45

Valero Energy Corporation (NYSE:VLO) stands out as one of the top oil refinery stocks due to its strong position in the oil refining industry. The company refines petroleum-based and low-carbon liquid fuels, distributing its products globally. Valero operates through three segments: Refining, Renewable Diesel, and Ethanol, with a primary focus on refining operations. It produces various refined products such as gasoline, diesel, jet fuel, and asphalt, distributing them through a network of outlets, including Valero, Beacon, and Diamond Shamrock. This extensive refining network, along with its focus on expanding renewable energy projects, solidifies Valero Energy Corporation (NYSE:VLO) standing in the sector.

In its Q2 2024 earnings report, Valero Energy Corporation (NYSE:VLO) reported better-than-expected results with earnings per share (EPS) of $2.71, surpassing the consensus estimate of $2.60. Despite a year-over-year decline in net income from $1.9 billion to $880 million due to lower refining margins, the company’s financial performance remained strong, driven by robust refining operations and a high throughput capacity utilization rate of 94%. The Refining segment reported $1.2 billion in operating income, showcasing the resilience of its core business amidst volatile market conditions.

Valero Energy Corporation (NYSE:VLO) renewable diesel and ethanol segments also contributed positively to its overall performance, with the Renewable Diesel segment achieving sales volumes of 3.5 million gallons per day. Although the segment’s operating income declined compared to Q2 2023 due to planned maintenance activities, Valero Energy Corporation (NYSE:VLO) commitment to renewable energy positions it well for future growth. Additionally, the company’s Ethanol segment produced 4.5 million gallons per day, reflecting a modest increase from last year.

Valero Energy Corporation (NYSE:VLO) strategic focus on optimizing refining assets and expanding its renewable fuel capabilities is evident in its ongoing projects, such as the Diamond Green Diesel sustainable aviation fuel project. This project is expected to be operational in Q4 2024, enhancing Valero’s competitive edge in renewable energy production.

Moreover, Valero Energy Corporation (NYSE:VLO) solid financial position, with $2.5 billion in net cash from operating activities and a debt-to-capitalization ratio of 16%, enables it to maintain a high dividend payout and share buyback program. This commitment to shareholder returns, coupled with a well-capitalized balance sheet, makes Valero Energy Corporation (NYSE:VLO) an attractive stock in the oil refinery sector.